Buying commercial properties can be a dichotomy. It can be mercifully profitable or it can be financially devastating. Carefully consider the specific type of property that you are most interested in working with, and line up possible sources of funding. This article will carefully guide you through the real estate process.
Examine socioeconomic conditions in the neighborhood you’re thinking of purchasing commercial real estate in. Pay special attention to the unemployment rate, and the average income level in your property’s neighborhood. In addition, you want to keep in mind what else is close to the property. Any place that supplies a large number of jobs to the economy can raise the resale value of any property and make it much faster to sell if you decided to go that route. Big employers might consist of hospitals, factories, or universities.
Take photos with a digital camera. Make sure your pictures clearly show any damage or defects, including carpet stains, holes in the walls or discoloration of plumbing and counter tops.
Location is essential to the commercial real estate. Consider how the neighborhood will affect business. Look at the growth of areas that are similar. By calculating growth in similar areas, you will be able to ascertain whether the piece of property you are looking at is going to continue growing.
Your investment may require substantial amounts of your individual time and attention in the beginning. First you will need to find a property that you think is worth purchasing, and you may have to remodel or repair it. Don’t abandon your investments because they are eating into your personal time. It will pay off in the long run.
Learn to understand the commercial real estate metric called Net Operating Income (NOI). In order to be successful, you will have to make sure that you never dip into the negative.
If you rent commercial property, do what you can to keep occupancy high. Remember that if you have empty units, you have to take care of them. Maintenance costs on empty units can add up. If occupancy is low, you may want to see if something is wrong with your property, and if there is, fix it.
Check out where the utility hook-ups are on any commercial property. Every business’ needs are different, but at a minimum, most businesses will need power, sewer and water services.
Advertise commercial property both to local and distant buyers. Too many people assume that only the locals are interested in buying property in the area. There are many investors who are interested in financing properties which are outside their area as long as they are a great deal.
You must know how to deal with an emergency, should it arise. Find out from the landlord who you should call if the worst happens, and you need immediate repairs. Have their phone number handy and know how long it will take them to arrive in an emergency. Use any information you can get from your landlord so contingencies are ready for the times your normal business operations are interrupted so you can safeguard your customer service and your reputation.
Real estate brokers for commercial properties have different areas of expertise. A full service broker works with both the tenants and the landlord. Some agents represent only the tenants. Consider hiring a tenant-only broker as he’ll have the most experience in dealing with situations such as yours.
If you are taking out a commercial loan, you must pay for the appraisal yourself. If someone else orders the appraisal, the bank cannot use it for the commercial loan. Order your appraisal yourself to ensure that you will be eligible for commercial loans.
Ensure you have the best real estate agent, ask if they are successful and judge their response. Ask them how their results are measured. You need to be able to comprehend their strategies and methods. Do not partner up with a broker who is completely the opposite to you in beliefs and the way matters are addressed.
Always ask how a broker negotiates, before hiring him or her. Find out about their experience and training. You’ll also want an agent that conducts themselves professionally and ethically, and who has expertise in closing beneficial deals. Have them provide you with examples of negotiations they’ve engaged in previously, both good and bad.
Before you enter the commercial real estate market, be sure you have established your presence online. Design yourself a website, Facebook page or LinkedIn profile. Strive to improve the search engine rank of your website through search engine optimization. These principles make it easier for online users to locate your site through search engines.
As was mentioned earlier in this article, commercial real estate is not a free source of money. You will need to invest considerable time, money and effort to have a good shot at profitability. You still might lose money even after doing all of that.